No-frills supermarkets for WA

No-frills supermarkets for WA - The West Australian

German discount supermarket chain Aldi will spend hundreds of millions of dollars rolling out about 60 stores in WA in a move set to shake up the State's supermarket duopoly.

Aldi will begin recruiting a 1200-strong WA workforce once it secures a 40,000sqm distribution centre, expected within two years, as part of a $500 million expansion in WA and South Australia.

Group managing director Tom Daunt said other stores were likely to drop their prices once the no-frills chain set up shop in WA.

This could include the price of alcohol, with Mr Daunt revealing the chain would seek licences to sell discount liquor in WA as it does at some of its 300 east coast stores.

Aldi liquor prices start at $10 for a six-pack of beer, $9 for a four-can pack of a vodka mixer and $2.50 for a bottle of wine.

"We have looked carefully at the local groceries market and think there is a significant opportunity for a new competitive supermarket offering," Mr Daunt said yesterday.

"Our competitors' pricing decisions are a matter for them but evidence by consumer watchdog Choice and the Australian Competition and Consumer Commission does show that wherever Aldi is present in a market, other major supermarkets reduce their prices."

A 2009 Choice survey found Aldi's in-house brand groceries were an average 25 per cent cheaper than similar branded items at the two major supermarkets.

A spokesman for Aldi said its planned move west was driven by several factors including WA's population growth and the advent of Sunday trading.

The location of its new stores will depend on where it can find sites for its 1500sqm warehouse-style supermarkets, where customers help themselves from pallets.

There are question marks over whether it will open in the North West, given higher transport and operating costs in the region could cause the chain to fall foul of its national pricing policy, under which it sets one price nationally for each product.

The chain, which has 8000 supermarkets globally, has a 10 per cent market share in the Eastern States and has the same sales turnover as both Kmart and Big W.

Coles and Woolworths both said yesterday they were not concerned at the move, claiming they welcomed the competition. "We welcome competition, even against a massive global retailer like Aldi," a spokesman for Woolworths said.